Editors' pick: Originally published April 13.
Wednesday's announced bankruptcy of the world's largest independent coal producer Peabody Energy (BTU - Get Report) could put some downward pressure on shares of other coal companies or companies that do business with it, including Kinder Morgan (KMI - Get Report) , analysts say.
The Houston energy transportation and storage provider said at its annual analyst day this past January that its exposure to the coal producer was around $30 million in total Ebitda. That compares with a $34 million adjustment to Kinder Morgan's Ebitda as a result of Arch Coal's bankruptcy last year, which represented a half a percent of its Ebitda that year, according to a Wednesday report by Piper Jaffray unit Simmons & Co.
"While the news does not come as a surprise due to the highly challenged coal market and recent acknowledgements by Peabody of further balance sheet support needs, the headline could weigh on KMI this morning," analyst Brian Gamble wrote.
Cloud Peak Energy (CLD) and Alliance Resource Partners (ARLP - Get Report) could also be negatively impacted, as they are two of the remaining publicly traded coal companies that haven't filed for Chapter 11.
So could Foresight Energy (FELP - Get Report) , which last month skipped an interest payment on its senior notes and warned it might have to file for Chapter 11 if it couldn't negotiate an out-of-court deal. On Wednesday it said it was able to extend the terms of forbearance agreements on some of its debt until April 15 to provide additional opportunity to engage in discussions and negotiations with noteholders and secured lenders.
Consol Energy (CNX - Get Report) also has some coal operations but has been selling some of them off to focus on natural gas. Last month it agreed to shed its Buchanan Mine in southwestern Virginia and other metallurgical coal reserves to Coronado IV, a company back by energy focused investment firm Energy & Minerals Group, for $420 million.
Shares in St. Louis-based Peabody were expected to be suspended after the coal company voluntarily filed for Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Missouri.
The filing came after a drop in coal prices affected Peabody's ability to service debt taken on to fund its expansion into Australia, where it bought Macarthur Coal in 2011 for $5.1 billion. Those operations aren't included in the filing.
"This was a difficult decision, but it is the right path forward for Peabody," CEO and president Glenn Kellow said in a statement. "Through today's action, we will seek an in-court solution to Peabody's substantial debt burden amid a historically challenged industry backdrop. This process enables us ... to lay the foundation for long-term stability and success in the future."
Peabody said it lined up $800 million in debtor-in-possession financing organized by Citibank, giving it enough liquidity to continue operating its facilities. It also said it cancelled the $463 million sale of its assets in New Mexico and Colorado after buyer Bowie Resource Partners wasn't able to raise the financing to complete the deal.
Peabody -- which warned last month it might have to file for bankruptcy after it failed to make repayments on some of its loans -- follows other coal companies that have gone bust due to lower coal prices as a result of an economic slowdown worldwide and increased environmental regulation for the commodity, including Alpha Natural Resources, Patriot Coal, Walter Energy, JW Resources and Xinergy.